PF Tax Issue To Be Addressed During Budget Discussion: FM

Hindustan Times via Getty ImagesNEW DELHI, INDIA - MARCH 1: Finance Minister Arun Jaitley at Parliament during the ongoing Budget Session on March 1, 2016 in New Delhi, India. Both the Houses of Parliament saw repeated adjournments as Opposition confronted the Government on a range of issues, including MoS for Human Resource Development Ram Shankar Katheria's remark following a Vishwa Hindu Parishad (VHP) leaderâs murder in Agra. (Photo by Mohd Zakir/Hindustan Times via Getty Images)

Amid widespread concerns, Indian Finance Minister Arun Jaitley on Wednesday said in Lok Sabha that the issue related to the proposal to tax PF will be addressed by him during the discussion on Budget.

"We are seized of the problem. I will address it during the Budget discussion," Jaitley said.

He was responding when TMC members raised the issue soon after the question House with Saugata Roy demanding that Jaitley, who was in the House, make an immediate announcement.

TMC leader Sudip Bandhyopadhyaya said the Budget proposal to tax the EPF has caused nation-wide concern.

Jaitley had spoken on similar lines earlier in the day at a meeting organised by industry chambers and said he will spell out the final decision on the matter when he speaks during the debate on Budget in Parliament.

Jaitley in his Budget for 2016-17 had proposed that 60 per cent of the withdrawal on contribution to employee PF made after April 1 this year will be subject to tax. This would apply to superannuation funds and recognised provident funds including EPF.

He also proposed a monetary limit for contribution of employer in recognised PF and superannuation fund at Rs 1.5 lakh per annum for taking tax benefit.

The proposal came under immediate attack from various employees unions including RSS-backed BMS, and political parties who termed it as "an attack on the working class and a clear case of double taxation."

The Finance Ministry had earlier in the week issued a press note containing a clarification about the proposed changes in the tax treatment of recognised PFs and recognised pension schemes noting that there seems to be some amount of lack of understanding about the changes made in the Budget on the issue.

"We have received representations today from various sections suggesting that if the amount of 60 per cent of corpus is not invested in the annuity products, the tax should be levied only on accumulated returns on the corpus and not on the contributed amount.”

"We have also received representations asking for not having any monetary limit on the employer contribution under EPF, because such a limit is not there in NPS. The Finance Minister would be considering all these suggestions and taking a view on it in due course," the press note said.